Introduction to Special Topic Forum Privatization and Entrepreneurial Transformation: Emerging Issues and a Future Research Agenda (original) (raw)

2000, Academy of Management Review

Privatization has become a popular strategy to promote economic development in emerging, developing, and developed economies. Despite its popularity, little attention has been devoted to examination of the organizational and managerial implications of privatization or to the effect of privatization on companies' ability to innovate and engage in entrepreneurial activities. In this article we discuss privatization's increasing importance and present a model that links privatization to a firm's entrepreneurial activities. We conclude with a discussion of issues that we believe deserve scholars' attention in theory development and subsequent empirical examination. The global economic landscape is undergoing unprecedented change that is multifaceted and wide ranging in nature (Hitt, Harrison, & Ireland, in press b; Ireland & Hitt, 1999) and that is clearly evident in the adoption of privatization as a strategy on a worldwide basis. The primary purpose of this strategic option is to promote economic development in emerging, developing, and developed economies. Emerging economies and their markets, however, are characterized by economic, social, or political instability (Hitt, Dacin, Levitas, Arregle, & Borza, in press a). There are also substantial differences in the institutional infrastructure between emerging and developed economies (Newman, this issue). Given that the idiosyncratic characteristics of an economy's structure can profoundly affect the rules of exchange in its markets (North, 1990), these differences can have a major effect on the outcomes that countries or companies can achieve through privatization. Following decades of experimentation with various systems of state ownership and control, many nations have adopted privatization strategies as a centerpiece of their national policiespolicies that aim to promote and support social progress and economic development or to initiate economic renewal. Over 700billioninassetshavebeenprivatizedintheworld′seconomiesinthelastdecadealone,approximately40percentofwhichhasoccurredinemergingeconomies(Ramamurti,thisissue).Brazilisexpectedtoprivatizeasmuchas700 billion in assets have been privatized in the world's economies in the last decade alone, approximately 40 percent of which has occurred in emerging economies (Ramamurti, this issue). Brazil is expected to privatize as much as 700billioninassetshavebeenprivatizedintheworld′seconomiesinthelastdecadealone,approximately40percentofwhichhasoccurredinemergingeconomies(Ramamurti,thisissue).Brazilisexpectedtoprivatizeasmuchas80 billion in assets before its ongoing conversion of public assets to private ownership is completed (Doh, this issue). Countries using privatization strategies as a primary policy tool to induce and promote economic growth represent most of the world's regions, including Africa, Asia, Latin America, and Europe. By placing the means of production outside of state ownership and control, privatization unleashes the forces and discipline of the free mar-Duane Ireland was on the faculty at Baylor University while working on this special topic forum.